eNaira, the Central Bank Digital Currency (CBDC), promoted by Godwin Emefiele, the suspended governor of Nigeria’s central bank, faces an uncertain future.
According to sources close to the market, the eNaira project is unlikely to be continued – at least with the same fervour as Emefiele – by the new governor of the CBN given the widespread apathy that has greeted its public launch. The former CBN governor who is now in the custody of the Department of State Security Services (DSS) is also likely to be questioned on the funds used to deploy and push the adoption of the eNaira from inception.
The launch of the eNaira was not well received by the public after it became clear that the CBN was using it to counter growing interest in cryptocurrencies. The apex bank placed a restriction on banks and other financial services from providing financial support to crypto exchanges and related businesses. It also issued an order for businesses’ accounts to be closed, which forced many exchanges to shut down or relocate from Nigeria or pivot from offering cryptocurrencies to adding new services.
A remote by the International Monetary Fund showed that while eNaira has its promise; it is not being embraced by many Nigerians. The apathy cuts across over 90 percent of the banking population. Apart from the overwhelming majority who do not have it on their phone, many of the people who downloaded the wallet were not using it. Those who have used it only did so once and did not continue.
However, some experts say the best approach for the next CBN governor to take would be not to suspend the eNaira, but to re-evaluate the approach to delivering the initiative.
An expert, who wants to remain anonymous, said the inability of the CBN to convince users, including banks of the incentives has been a major drawback of the eNaira.
The eNaira is not entirely different from the physical naira. They are the same; the difference is one resides online or is transferred digitally while the other is physical cash. Hence, the eNaira which is digital can carry out the same function as the cash.
The CBN introduced two used cases for the eNaira, as a wholesale currency and as a retail currency. As a wholesale currency, the banks continue to conduct transactions directly with the CBN and provide a platform for their customers to use eNaira to carry out daily payments. This would have been the perfect use case that makes sense to the banks.
However, by pushing the retail service, the CBN was going to bypass the banks and allow people to bank directly with them. This cuts off the banks and positions the CBN as a major competitor in financial services. The banks quickly saw the threat the eNaira poses and opposed it from the beginning. Currently, the eNaira is housed on the various banks’ apps but they are not actively marketed to create more awareness.
“It may move to the back burner, but I don’t see it being killed outright; it is a public initiative with global attention,” said Emeka Ajene, a fintech expert.